Wayne Co. close on $4M McLouth Steel deal with Moroun

Nicquel Terry
The Detroit News

Detroit — Grosse Pointe billionaire Manuel “Matty” Moroun is close to inking a $4 million deal with Wayne County that would allow him to redevelop the former McLouth Steel site along the Detroit River into an industrial facility.

The Wayne County Commission’s Committee of the Whole moved the proposal forward on Wednesday, despite reluctance from some commissioners who cited Moroun’s track record of empty, decaying properties in Detroit.

The sale would allow Moroun’s real estate company, Warren-based Crown Enterprises Inc., to demolish the current structures and build manufacturing and logistics centers, where 60 percent of jobs would go to Wayne County residents, according to officials.

The proposal will be up for a final vote Thursday by the Wayne County Commission. Approval would transfer the property to the county’s land bank, which would finalize the sale to Crown Enterprise.

Officials say the $4 million will cover the unpaid taxes on the property that is located on Jefferson in Trenton.

Khalil Rahal, the county’s economic development director, said the county’s administration did not want to see the property go to a tax auction where the buyer would not be held accountable for redeveloping the site.

Under the deal, Crown Enterprises is required to demolish the structures at the site within 24 months, or the county can file an injunction lawsuit, Rahal said. Crown Enterprises is also required to invest $20 million on the property within 72 months, or pay a $1 million fine to the land bank.

“If they fall $1 short, it’s a $1 million penalty,” Rahal said.

Moroun’s company already has put in $4 million into the county’s land bank to combat rumors the company would back out of the deal, Rahal said. The money is non-refundable even if the deal isn’t approved by the county.

The $4 million will be split among the entities that are owed taxes including $1.4 million to the Riverview School District, $1.4 million to the city of Trenton and $650,000 to Wayne County.

The McLouth property is attractive because of the three international railways traversing through it, the new Gordie Howe International Bridge planned nearby and 1,600 feet of waterfront dockage with a water depth of 28 feet.

Rahal said Crown Enterprises was one of four companies to respond to a request for qualification this summer when the county sought developers for the 188-acre industrial site.

“When the property was foreclosed on, the county wanted to do everything they could to redevelop the site,” Rahal said during the meeting Wednesday. “Good intentions are always welcome, but at the end of the day, sometimes you just need someone who has the capital.”

Wayne County foreclosed on the McLouth Steel property in March for $3.7 million in unpaid property taxes, according to a document obtained by The Detroit News. The state and city of Trenton both declined to purchase it at fair market value, which then left it in the hands of Wayne County.

Trenton Mayor Kyle Stack said statutory law gave the City Council a limited amount of time to decide on buying the site. The city opted to pass up the property because it didn’t want to take on the liability of hazardous waste and environmental concerns at the property.

A 2014 expanded site inspection report done by the Michigan Department Environmental Quality at the request of the Environmental Protection Agency said contaminated soils at the site consist of slag fill material containing metals, arsenic, lead, cadmium, chromium, copper, iron, selenium and zinc, as well as documented spills with contaminated soils containing PCBs.

Stack described the former McLouth property as an eyesore with broken windows and overgrown grass.

“We are happy that we are going to be able to move forward with getting a viable business and some jobs,” Stack said. “It’s been depressing.”

Some commissioners said they were concerned that Moroun would sit on the property, and it would end up like his other vacant buildings. One example is the Michigan Central Station that he owns— one of Detroit’s famous symbols of blight. Trenton officials also acknowledged there were concerns in the city that Moroun could buy the land and sit on it.

Moroun already owns about 75 acres of property north of the site.

“We don’t trust that guy to get rid of eyesores,” said Commissioner Diane Webb, who voted no on the deal on Wednesday. “I don’t see why you couldn’t pursue someone else to take over that property.”

Other commissioners said they simply did not want the property to go to a tax auction.

“We want to make a decision today based on helping the community,” Commissioner Al Haidous said. “I understand the fear of a bad reputation of one person in the past, but his ability to execute financially is there.”

Michael Samhat, president of Crown Enterprises, assured the commission that he is working to change the negative narrative of the company.

“There is no way that I’m going there and disappointing that city,” Samhat said. “No way I’m going there and not standing up to my commitments with the county. It’s impossible.”

After Samhat’s speech, some commissioners who expressed opposition early in the meeting said they would support the deal.

“I’m going to take you at your word that things will be different,” Commissioner Irma Clark-Coleman said.

Under the agreement, Crown Enterprises will have until Dec. 15 to close on the property, county officials say.

Wayne County worked closely with Trenton to identify the best use of the property for the local community, said Jim Martinez, a spokesman for Wayne County Executive Warren Evans. He said the former McLouth site is an asset as a logistics property.

“The idea was that we wanted to take the best route to get it into productive use,” Martinez said.

The McLouth Steel Co. had not operated on the site since the late 1990s. The factory was purchased and operated by Detroit Steel Co. until it ceased operations and local operators purchased the plant land. McLouth Steel was founded in Detroit in 1934.

In 1948, it bought a mile-long riverside property in Trenton, part of $100-million expansion. McLouth Steel, which had plants in Trenton and Gibraltar, filed for bankruptcy twice — in 1981 and 1995. It was later sold to Detroit Steel.

In 2006, a proposal to turn the property into a residential-commercial site called the Bay Village of Trenton failed. A proposal to renovate the site for more than $200 million and produce steel again there also failed.


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Twitter: @NicquelTerry